Are we still convinced that electric vehicles are the best way forward?

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Procedure particulars

The vote Thursday was not technically on the California rules themselves, which were scheduled to phase in between 2026 and 2035, but rather a Biden-era waiver from the U.S. Environmental Protection Agency allowing the Golden State to enact its newest set of emissions standards for light-duty vehicles. Lawmakers also voted to cancel the waiver allowing California's standards for heavy-duty vehicles.

The Senate canceled the waivers using the CRA, a law that gives Congress the power to cancel rules set by outgoing presidents, so long as the rules were finalized within the last 60 legislative days of a given year. Proponents of the waiver have argued that it is not a rule and therefore not subject to the CRA.

"This is not a narrow assertion of congressional authority, as the other side claims," Senate Minority Leader Chuck Schumer, D-New York, said on the Senate floor Wednesday evening ahead of procedural votes teeing up the measure's final passage. "This is an aggressive new precedent."

"Today, it's all about California emissions waivers," he said. "But tomorrow, the CRA could now be used to erase any policy from an agency that the Trump administration doesn't like at a simple majority threshold."

Senate Majority Leader John Thune, R-South Dakota, downplayed those concerns while also condemning the California policy. He said EPA waivers for California are "clearly rules in substance, given their nationwide impact and scope."

"I would love to believe the Democrats have suddenly come to the realization of the importance of the legislative filibuster, no matter how misplaced their concerns would be in this particular instance," Thune said, responding to Schumer.

The Republican added: "I think a lot of Democrats support an electric vehicle mandate and are perfectly happy to allow California to set an EV mandate for the whole country. In fact, I think they're somewhat frantic at the prospect of losing this Green New Deal policy."

Former Democratic President Joe Biden, notably, could have skirted the issue by issuing the waiver earlier in his presidency. But Biden's wait until the final days of his term left the waiver vulnerable to a CRA challenge.

Crucially, all CRA measures require only a simple majority in both the House and Senate. That gave the California waiver vote an easier pathway to success in the Senate, where most actions require 60 votes and Republicans hold a 53-47 majority.

The U.S. House voted 246-164 earlier in May to pass a CRA measure to overturn the California waiver. Three Michigan House lawmakers were among 35 Democrats who voted for the measure: U.S. Reps. Shri Thanedar of Detroit, Hillary Scholten of Grand Rapids and Kristen McDonald Rivet of Bay City.

Republican U.S. Rep. John James of Shelby Township was a leader in that effort. "I have nothing against EVs. I would love to build every EV in Michigan, but my problem is with top-down, comply-or-die regulations dictated by the federal government," he told The Detroit News in a September interview.

Michigan's senior Democratic U.S. Sen Gary Peters of Bloomfield Township opposed the measure Thursday.

"People should be able to buy the car that best meets their own needs, whether it’s electric or gas-powered," Peters said Tuesday after Republicans announced plans for the vote. "But in this case, Republicans are just using this issue as a trojan horse to blow up the Senate’s rules and make it easier to ram through the Trump administration’s harmful agenda and overturn policies they oppose, like protections for workers and Americans’ access to health care.”

California's next move

California and environmental groups are likely to mount legal challenges. The head of the state's emissions regulator, the California Air Resources Board, forcefully spoke against the congressional action Thursday and signaled the agency would fight back.

CARB Chair Liane Randolph said in a statement: "California profoundly disagrees with today's unconstitutional, illegal and foolish vote attempting to undermine critical clean air protections. It’s an assault on states’ rights the federal administration claims to support that puts national air quality standards out of reach and will have devastating effects for the 150 million Americans who breathe unhealthy air every day.

"These actions are contrary to the text of the Congressional Review Act, as recognized by the nonpartisan U.S. Government Accountability Office and the Senate Parliamentarian. California will pursue every available remedy to challenge these actions and defend our right to protect the public from dangerous air pollution. Turning the clock back on both cleaner combustion engine requirements and zero-emission technology is an attack on clean air."

"This short-sighted political move is another strike against the long-term competitiveness of the U.S. auto industry in a global market that is rapidly advancing toward cleaner combustion technology as well as zero-emission vehicles," Randolph said. "These actions throw uncertainty into the middle of an ongoing vehicle certification process. Despite the market disruption brought on by the federal government, California remains steadfast in our commitment to work with manufacturers to keep moving toward a cleaner transportation system, and we will have more guidance in the coming days."

Democratic Gov. Gavin Newsom convened a special state legislative session in November to focus on "bolstering California legal resources" related to environmental issues, among others, against actions from the incoming Trump administration.

"The freedoms we hold dear in California are under attack — and we won’t sit idle. California has faced this challenge before, and we know how to respond," he said in a press release at the time.

Michael Buschbacher, a partner at the law firm Boyden Gray PLLC, said California is "pretty limited" in its options for legal recourse. "The CRA has a provision that says that, basically, anything Congress does under the CRA is not subject to judicial review,” he said in a phone interview ahead of the vote.

Buschbacher, who represents clients seeking to block pro-EV regulations, also questioned California's ability to get a waiver for similar rules later on, if or when Democrats return to power in Washington.

“The CRA also says that federal agencies cannot do something substantially similar to a rule that gets CRA’ed. That phrase has not really been tested in court," the attorney said. "The way I would interpret it would be: California can't get a waiver from the EPA for electric vehicle mandates."

He also predicted that the "notoriously retaliatory" state of California might use regulatory strategies, like certifications for compliance with highly complicated national on-board diagnostic standards, to "make companies miserable" if automakers do not adhere to its preferred emissions standards.

"If that kind of thing happens," Buschbacher said, "I would fully expect industry and probably the federal government to sue to stop that."
 

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I thought Barra, head of GM kept saying she only wanted electric engine and gas ones were bad but now

General Motors Co. is pouring $888 million into a plant near Buffalo, New York, to make V-8 engines used in full-size SUVs and trucks, the company said Tuesday.

The capital infusion into Tonawanda Propulsion will pay for new machinery, equipment, tools and renovations as the plant gears up to start making the next generation of V-8 engines in 2027.
The announcement comes as GM grapples with pressure from President Donald Trump to increase U.S. manufacturing or pay hefty import taxes it has imposed on vehicles and auto parts made outside the United States.

“Our significant investments in GM’s Tonawanda Propulsion plant show our commitment to strengthening American manufacturing and supporting jobs in the U.S.,” CEO Mary Barra said in a statement.
“GM's Buffalo plant has been in operation for 87 years and is continuing to innovate the engines we build there to make them more fuel efficient and higher performing, which will help us deliver world-class trucks and SUVs to our customers for years to come.”

The company invested $70 million in the plant in 2020 as part of an effort to ramp up production of Chevrolet Silverado and GMC Sierra pickups.

Tonawanda is the second GM propulsion plant to make sixth generation V-8 engines.
The automaker in 2023 spent another $500 million to get its Flint Engine plant ready to make engines that the company says will be "stronger performance than today's engines while benefiting fuel economy and reducing emissions," citing new combustion and thermal management innovations.

“This investment marks an exciting new chapter for our plant,” said Tara Wasik, plant director at Tonawanda. “For generations, our team has demonstrated its commitment to manufacturing excellence. We are grateful for the opportunity to continue supporting the Western New York community and steadfast in our mission to deliver world-class propulsion systems to our customers.”

UAW Local 774 President Teddy Maldonado told The Detroit News that local workers are relieved GM committed to more investments in the plant.
"Our workforce speaks for itself," Maldonado said. "They put pride in their work, and it’s paying off.”
 

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Bank of America's annual "Car Wars" report forecasts a "rough ride" for the U.S. industry in the next couple of years because of low model replacement rates and struggling electric vehicle growth.

The annual study led by analyst John Murphy predicts automaker performance in the U.S. market by looking at product launches over the next few years, with the premise that automakers with higher showroom replacement rates will perform better.
The report predicts those rates in the next couple of years will be historically low ahead of major truck launches from the Detroit Three later this decade, and because of cutbacks in electric vehicle products from low demand.

"What's wild this year is that we expect 159 models to be launched over the next four years," Murphy said before the Automotive Press Association. "Last year, it was over 200. Traditionally, it's over 200" over a four-year stretch.
He added: "This year, at 159, is a dramatic decline from above 200 last year. We have never seen this kind of change before."

Murphy noted there are 29 new model launches this year, the lowest in decades. He attributed the declines to a pullback in EV investment. Adoption of vehicles with all-electric powertrains has failed to meet industry expectations, with them comprising about 8% of annual U.S. sales. Limited access to charging stations, higher prices of EVs compared to gas-powered alternatives, range anxiety and more have limited adoption.

Car Wars is predicting 71 EV nameplates being offered over the next four years.
That's about half of what the forecast had expected two years ago.
"There are a lot of tough decisions that are going to be made," Murphy said.
"Based on the study, I think we're going to see multi-million dollar write-downs that are flooding the headlines for the next few years."

Ford Motor Co. last year wrote off nearly $2 billion when it canceled plans for a three-row all-electric SUV, saying it wasn't going to be profitable within the first year.

Murphy underscored that automakers will best serve their shareholders by emphasizing their core business, which is gas- and diesel-powered SUVs and trucks, and leveraging connectivity to get customers returning to smaller, strengthened dealer franchises. From those revenues, then, it can invest in future technologies like EVs, autonomy and other software applications and brave threats like tariffs and Chinese competition.

"I do think, as we look at this, although we've said lower product intros, that these core products that generate a lot of profit for the companies, including the D3, will likely create a pretty profitable next few years for the industry," Murphy said. "So although it looks a bit scary at the moment, I do think we're looking at a pretty good upside to earnings, and potentially stocks over the coming years."

Traditionally, replacement rates average about 15% in the industry. Car Wars predicts rates at about 11% in 2026 and 2027.
"It's going to be a little bit of a rough ride for these two years," Murphy said.
The report predicts the Detroit Three's replacement rate from model year 2026 to 2029 will fall around the industry average of 16%, indicating a likely stagnant market share. Ford's was at 16.1%, General Motors Co.'s was 15.7% and Chrysler parent Stellantis NV's was at 15.4%.

Ford Motor Co. spokesperson Mike Levine emphasized the Dearborn automaker has new product in the marketplace today, including the full-size Ford Expedition and Lincoln Navigator SUVs that recently went on sale.
"Ford is committed to offering our customers vehicles that they love and can’t live without," he said in a statement. "We are investing in all-new ICE, hybrid and electric vehicles to provide customers with freedom of choice to find the best vehicle to meet their needs."

Representatives for GM and Stellantis declined to remark on the report.

On the upper end of replacement rate, meanwhile, is Tesla Inc. It has a 22.4% replacement rate, indicating the Texas EV maker could grow its market share in the coming years. But the rate is also a bit "dubious," Murphy declared, noting Tesla has postponed launches and favors more frequent updates to its vehicles versus total redesigns.

"That's questionable whether that all will happen," Murphy said, "given their track record of not really introducing new-generation models."
On the lower end is Nissan Motor Co. Ltd. with a 12.3% replacement, indicating it could lose market share.
The automaker is under financial stress, has cut jobs and is losing market share in the United States with aging product.

"Nissan remains a mess," Murphy said. "It's just unclear what their commitment is, in their current form, to the U.S. market."
 
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